Avg. amount of leverage (data)

Hey guys,

I’m looking for the avg. amount of leverage a user borrows on Maker. Can you help me with this?

Thanks! :slight_smile:

Hm, not sure about getting the average, but with https://maker.blockanalitica.com/ you can see where liquidations will happen. There is probably a way to transform this data into a measure of leverage.

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You could also check out https://makervaults.descipher.io/ Better for finding the median for each collateral type, and prices associated with particular risk. For the mean, you can take TVL ($9.8 billion, Maker | Stats, Charts and Guide | DeFi Pulse) and divide by total Dai supply (3.532 billion Dai Stats), which gives you around 280%.

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I read this as “280% total collateralization ratio”.

My take on it is that you are looking for “the average user borrows 5,000 DAI”, right?

If it’s irrespective of collateral type, then my best guess is dividing the total Dai supply by the amount of vaults (except vaults = 0).

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Quick math using the Vault Tracker API.

23,299 vaults in total
7,333 vaults where collateral != 0
3,428,830,006.63 total principal excl. (with the above exclusion)

3428830006.63 / 7333 = 147,166.40 DAI per vault

Definitely not well done but hopefully this can give you a rough estimate.

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Hey, thanks for you help! :slight_smile:

Unfortunately that’s now what I’m looking for. Let me explain the question in a bit more detail. I’m looking for an answer to the question:

How much leverage are borrowers taking by using recursive borrowing: Buy ETH → Borrow DAI → Use this DAI to buy ETH → Use this ETH to borrow more DAI → repeat…

Any idea on this? It’s for sure a tough one…

That is indeed a tough one. In fact I think it might be almost impossible to answer due to the large number of different collateral types and ways to buy crypto with Dai.

There is of course an upper limit:
Assume one ETH is $100. Alice deposits 15 ETH, worth $1,500, to her Vault. She generates 1,000 Dai against it (the maximum possible given the 150% collateralization requirement), and then uses the Dai generated to purchase 10 ETH, which she deposits back into her Vault.

Alice can now generate a further 667 Dai against the extra $1,000 in ETH collateral. Purchasing $667 of ETH allows her to generate a further 444 Dai. Repeating this process provides a further 296 Dai, then 198 Dai, 131 Dai, 88 Dai, and 59 Dai. Ultimately a total of 3,000 Dai can be generated against the original 15 ETH, enabling Alice to leverage her initial stake by 200%.

Though in practice, that would make you very vulnerable to price fluctuations, and doesn’t take into account slippage or gas.

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@Mr_Bamboo unless you know how to write a scrypt that checks on-chain whether DAI minted was traded for additional collateral and then deposited and done this recursively as @Guy wrote, and for every vault type separately, I think you won’t get this answer easily.

Maybe one shortcut on a smaller sample size would be to check how many users interacted with Instadapp service that does this automatically. But again it will give you limited information if you are looking for aggregated leverage.

Also, you could look at largest vaults that represent majority of DAI minted and see whether they have DAI deposited on stablecoin liquidity mining venues for farming purposes which basically implies zero additional exposure to collateral. A lot of DAI from ETH vaults is still recycled at Compound.

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This is probably the most relevant question given the flash crash this week. I suspect in a secular bear market the unwinding of recursive leverage is going to lead to a bloodbath. This is why Liquidations 2.0 and B. Protocol are so important.

Hey guys/gals :slight_smile:

I’m still looking for a solution. Any ideas? :thinking:

Thanks!

I usually use the old Oasis portal to be able to visualize the collateralization %, I am sorry that the new version of oasis has it so uneven, it was very useful to see how healthy the system was.